Tim Walz and JD Vance had a fascinating discussion about economists on Tuesday, which I aggressively excerpt here:
Vance: A lot of economists “have PhDs, but they don’t have common sense and they don’t have wisdom.”
Walz: “You made a question about experts,” but “if you’re going to be President, you don’t have all the answers… My pro tip of the day is this, if you need heart surgery, listen to the people at the Mayo Clinic.”
Vance: “Governor, you say trust the experts, but those same experts for 40 years said that if we shipped our manufacturing base off to China, we’d get cheaper goods. They lied about that. They said if we shipped our industrial base off to other countries, to Mexico and elsewhere, it would make the middle class stronger. They were wrong about that. They were wrong about the idea that if we made America less self-reliant, less productive in our own Nation, that it would somehow make us better off. And they were wrong about it.”
Walz: “Look, I’m a union guy on this. I’m not a guy who wanted to ship things overseas… Much of what the senator said right there, I’m in agreement with him on this. I watched it happen, too.”
Will no one defend the experts? Jason Furman will… kind of.
Your ONE THING TO READ this week is Furman’s lecture, delivered last Friday at the Peterson Institute for International Economics: “In Defense of the Dismal Science.”
Furman is an exemplary representative for his profession—widely and deservedly respected across the political spectrum, formerly the chair of President Obama’s Council of Economic Advisers, and now a professor responsible for teaching introductory economics to nearly half the students who pass through Harvard College. Unlike some other economists featured here at Understanding America, he is, in my experience, an honest and open-minded practitioner eager to engage disagreements in good faith.
This honesty serves him well in the critique that he levels at economists and policy analysts on both Left and Right who rely upon caricatures of “Econ 101” or fall victim to respective vices: The Left, he notes, has a habit of replacing tradeoffs with just-so stories in which the pursuit of non-economic objectives like fighting climate change are sold as somehow good for growth and jobs too. The Right, meanwhile, tends toward absolutist views that prevent reasoned evaluation of tradeoffs because some policies (say, tax cuts) are supposedly always a good idea, while others (say, regulations) are always catastrophic job killers. These are excellent points, indeed the sort one might read here at Understanding America.
But who does that leave to defend? Furman ends the lecture not with concrete examples of economics done well, but rather with what he calls a “better alternative,” which is… “more economics” and “getting more comfortable with admitting and talking about tradeoffs.” This is, ironically, a meta example of the classic economist’s folly: “assume a can opener.” What would make economics better? If economists thought differently about different data. But that’s no Defense of the Dismal Science, it’s a politely framed assault on a failing profession, combined with a wish for a more defensible one.
I was also struck by this observation, in the midst of Furman’s case for more robust analytical tools to aid policymakers: “Sixty years ago revenue estimates, distribution tables and cost-benefit analysis played no role in the policy process. Now they are all commonplace.” That’s true as a descriptive matter, but it raises the rather fascinating question of whether the quality and sophistication of detailed economic analysis has any correlation with the quality of policymaking. Plentiful budget estimates appear not to have improved the quality of the federal tax code or sanity of the federal budget. Endless cost-benefit analyses have accompanied an explosion of regulation with questionable return on investment at best. Economists uniformly bet their reputations on the wisdom of embracing free trade with China, lost the bet, and now insist more loudly than ever that they and they alone properly understand trade policy.
Whatever economics could be, as practiced it has become a corrosive force in both politics and governance. Rather than more economics, perhaps what we need is more political economy, which recognizes economic thinking as one input to a political decision-making process in which economists are entitled to the exact same one-vote-per-person input as everyone else. I join Furman in wishing for a profession that understands its limits and operates honestly within them. But I see, and Furman gives, little reason for optimism.
BONUS LINK: The Chicago Policy Review notes that two-thirds of economics PhDs have at least one parent with a graduate degree, which is kind of wild.
BONUS BONUS LINK: As this edition of Understanding America went to press, the latest episode of the Ezra Klein Show posted, with Ezra interviewing Furman. I haven’t had a chance to listen, but I’m sure it’s interesting!
Recommended Reading
All Who Squander Are Lost
How trade deficits, like budget deficits, mortgage our future for consumption today
The Arc of the Economic Debate Is Long, but Bends Toward Tariffs
A roundup from Oren Cass about what you should be reading from around the web over the last week to better understand America.
Against Justin Wolfers-ism
The temptation to use economics as propaganda does not serve economists well